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The Future of International Financial Reporting. Sir David Tweedie IASB Chairman. Need for Convergence. Attracting investment through transparency Reducing the cost of capital Increasing world-wide investment Reducing costs. IASC Developments. Improvements Project. IASC Developments.
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The Future of International Financial Reporting Sir David TweedieIASB Chairman
Need for Convergence • Attracting investment through transparency • Reducing the cost of capital • Increasing world-wide investment • Reducing costs
IASC Developments • Improvements Project
IASC Developments • Improvements Project • IOSCO Agreement
IASC Developments • Improvements Project • IOSCO Agreement • The Restructuring
IASB Structure 19 Trustees Standards Advisory Council IASB IFRIC National Standard Setters
IASC Developments • Improvements Project • IOSCO Agreement • The Restructuring • EU 2005
IFRS Around the World CountriesChange Total in 2005in 2006in 2006 IFRSs permitted 23 0 23 IFRSs required 65 +1 66 (for all domestic companies) IFRS required6 0 6 (for some domestic companies) 94+195
Role of National Standard Setter • Deal with national issues • Align agenda • Influence IASB debate • Lead on certain issues
The Agenda • Improvements • IFRS I
Insurance Extractive Industries Grandfather Standards
Share Based Payments • Company not party to transaction • Employees do not provide services • No cost to company • EPS hit twice • Adverse economic consequences
FASB/IASB Agreement • Remove differences • Align Agendas • Interpretation
Convergence Short-term Differences IASB – - Business combinations (goodwill/brands, acquisitions, IPR&D) - Asset Disposals and Discontinued Operations (IFRS 5) - Provisions (soon)
Convergence FASB - - EPS - Voluntary changes in accounting policy - Exchanges of non-monetary assets - Inventory spoilage and idle capacity - Share options
Conceptual Framework Issues • The objectives of financial reporting • Qualitative characteristics • Definitions of assets and liabilities • Recognition • Measurement • Presentation
Dr = Asset or Expense
Dr = Asset or Expense or Whatsit
Reconciliation Plan – Short Term IASB - Borrowing costs - Government grants - Joint ventures - Segments Joint - Impairment - Income Taxes
Reconciliation Plan – Short Term FASB - Fair value option - Investment properties - R&D - Subsequent events Joint - Impairment - Income taxes
Reconciliation – Major Projects • Business combinations • Consolidations/SPV • Financial Instruments • Derecognition • Fair value measurement • Revenue Recognition
Reconciliation – Major Projects (cont) • Liability and Equity • Leases • Intangibles • Performance Reporting • Pensions
Performance Reporting • Statements • Comprehensive income/Cash flows • Recycling • Remeasurement MD&A
Pensions £m Deficit 10 Less 10% of liabilities 4 6 Spread over 10 year working life Deficit per accounts - £600,000
Problems for IASB • Principles v rules
Problems for IASB • Principles v rules • Acceptance of Standards • EU • SEC
Problems for IASB • Principles v rules • Acceptance of Standards • EU • SEC • Enforcement
Other Projects • Insurance • Financial Risk Disclosure (IASB) • SMEs (IASB)